Key Takeaways
- • NICE Ratings raised the outlook on Hana Securities' unsecured bond credit rating from 'Negative' to 'Stable' on April 23, 2025, while affirming the senior unsecured rating at 'AA' and the subordinated unsecured rating at 'AA-'.
- • The agency cited a recovery in profitability, with Hana Securities returning to profit in 2024 after a 2023 loss, including net income of 212.8 billion KRW and ROA of 0.4%.
- • Capital adequacy was supported by roughly 3 trillion KRW in rights offerings since 2018 and a 150 billion KRW hybrid capital issuance in 2023 acquired by Hana Financial Group.
- • NICE Ratings flagged domestic and overseas alternative investment exposure and real estate market weakness as continuing risks to asset quality and profitability.
Summary
NICE Ratings (Nice Investors Service) announced on April 23, 2025 that it had upgraded the outlook for Hana Securities' unsecured bond credit rating from 'Negative' to 'Stable', according to the Asia Business Daily. The senior and subordinated unsecured bond ratings remain at 'AA' and 'AA-', respectively.
The agency cited three main factors: a recovery in profitability, a limited likelihood of a sharp deterioration in asset quality, and maintenance of strong capital adequacy supported by capital increases such as rights offerings. Jung Wonha, a lead researcher at NICE Ratings, said the company posted a loss in 2023 due to customer loss compensation tied to operations, as well as proactive loss recognition and provisioning for alternative investments. The company returned to profitability in 2024. Investment banking profits rose, mainly from expanded debt guarantees, and the trading division, including proprietary and financial trading, improved significantly year on year. The company posted a return on assets of 0.4% and net income of 212.8 billion KRW. Jung said the stability of commission trading and asset management income, along with IB profits from debt guarantees centered on high-quality business sites, supports the view that current profitability can be maintained.
On capital, Hana Securities has raised approximately 3 trillion KRW through rights offerings since 2018, including 1.2 trillion KRW in 2018 and 500 billion KRW annually from 2020 to 2022. It also issued 150 billion KRW in hybrid capital securities in 2023, acquired by Hana Financial Group. NICE Ratings expects the company to maintain a certain level of capital adequacy based on its expanded equity base.
The agency warned of risks. Over the medium to short term, profit volatility and credit loss burdens could increase amid a deteriorating business environment. NICE Ratings identified domestic and overseas alternative investment exposure as a key review item, noting that slowing real estate markets at home and abroad could further weaken asset quality and profitability. It said it will continue to monitor real estate market fluctuations and the resulting level of non-performing alternative investments. Nonetheless, the agency said easing downward pressure on the real estate market from interest rate cuts, together with the company's proactive loss recognition and provisioning, limits the likelihood of a sharp deterioration in profitability and asset quality.
The agency cited three main factors: a recovery in profitability, a limited likelihood of a sharp deterioration in asset quality, and maintenance of strong capital adequacy supported by capital increases such as rights offerings. Jung Wonha, a lead researcher at NICE Ratings, said the company posted a loss in 2023 due to customer loss compensation tied to operations, as well as proactive loss recognition and provisioning for alternative investments. The company returned to profitability in 2024. Investment banking profits rose, mainly from expanded debt guarantees, and the trading division, including proprietary and financial trading, improved significantly year on year. The company posted a return on assets of 0.4% and net income of 212.8 billion KRW. Jung said the stability of commission trading and asset management income, along with IB profits from debt guarantees centered on high-quality business sites, supports the view that current profitability can be maintained.
On capital, Hana Securities has raised approximately 3 trillion KRW through rights offerings since 2018, including 1.2 trillion KRW in 2018 and 500 billion KRW annually from 2020 to 2022. It also issued 150 billion KRW in hybrid capital securities in 2023, acquired by Hana Financial Group. NICE Ratings expects the company to maintain a certain level of capital adequacy based on its expanded equity base.
The agency warned of risks. Over the medium to short term, profit volatility and credit loss burdens could increase amid a deteriorating business environment. NICE Ratings identified domestic and overseas alternative investment exposure as a key review item, noting that slowing real estate markets at home and abroad could further weaken asset quality and profitability. It said it will continue to monitor real estate market fluctuations and the resulting level of non-performing alternative investments. Nonetheless, the agency said easing downward pressure on the real estate market from interest rate cuts, together with the company's proactive loss recognition and provisioning, limits the likelihood of a sharp deterioration in profitability and asset quality.
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